Three barriers to innovation in insurance

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Innovation in insurance is a complex, yet invigorating challenge. Canadians living and working in the fast-paced digital economy are looking for products that reflect their way of life. They want easy-to-use, on-demand solutions that don’t disrupt their lifestyles or break the bank. At Duuo, we’ve been working hard to overcome these challenges and develop products that fit the needs of Canadians.

Developing an insurance product that fits this mould is particularly challenging for three reasons: static regulations, a disconnect between insurance and technology, and issues with fair use of data.

At the time of enactment, Canada’s insurance regulations focused on traditional broker and agent distribution channels. Canadians’ living and purchasing habits have come a long way since then. Now, more than ever, they’re looking for online instant-purchase solutions that don’t require communication with a broker or agent. Yet, Canada’s insurance regulations have not fully adapted to reflect this change in consumer demand. As a result, insurance companies face compliance risks when developing new products that serve Canadians participating in the digital economy.

With increasing pressure to provide tech-based insurance solutions, the industry is now scrambling.

These risks are amplified when companies look to launch new products nationally, as regulations vary from province to province. For example, many insurers will offer their personal insurance pricing based on a credit score, but Newfoundland’s regulations prevent insurers from using this data for rating purposes.

Insurance companies that manage to make it over this initial hurdle face another set of challenges when it comes to product development. Historically, insurance and technology have been kept separate, with most technology-based innovations centred on the improvement of user experience. It is rare for an individual to have an education in both. With increasing pressure to provide tech-based insurance solutions, the industry is now scrambling to merge this divide. There is a need to find talented technology professionals, like Business Analysts, that not only empathize with consumer protection needs, but also understand the regulatory challenges with the development of new solutions.

Insurance companies have access to a lot of personal data, including date of birth, financial health, medical records, credit scores and driving records. Protecting this data and its fair use is becoming more challenging with online platforms, particularly those making automated underwriting decisions and a breach could result in severe consequences for both the customer and company.

Additionally, product development teams need to eliminate or minimize any possibility of unintentional discrimination against a class of consumers based on their financial, ethnic or social background.

At Duuo, we’ve been working hard to overcome these challenges. We launched in 2018 with the introduction of Short-Term Rental Insurance, and since then, have expanded our portfolio to offer six on-demand products. One of our most notable innovations to-date is Gig Insurance, which provides reliable, on-demand coverage designed for gig platforms. We were the first company in Canada to launch this type of product, and we did it in less than six months!

Gig workers
Gig workers dont think about insurance But like most workers they need it

We started by analyzing the gig economy and determining what would make the most sense for app users in terms of risk protection and affordability. Canadians that use apps to help find and manage work often take on smaller jobs, multiple times a day. They don’t even think about insurance, or assume the cost is too high for the benefit. But, like most workers, they need it. The real question was how much they were willing to pay for it. Traditionally, insurance has been priced on an annual basis, with coverage limits and contracts designed around that term. We worked to establish feasible, yet affordable pricing for short-term and recurring coverage, re-drafted the typical insurance contract, and engineered a user experience in a way that works well with third-party apps and platforms. Our goal is to create experiences where insurance is sold through the third-party platform, without having to bring the customer directly to Duuo.

As with any new insurance product, we had to ensure that despite its on-demand and short-term nature, our Gig Insurance met the liability protection needs of our users and no compromises were made on coverage. We also had to make sure we maintained one-on-one relationships with our gig insurance customers, and they remained well-informed about limitations in the digital self-serve environment.

For the official launch, we teamed up with HeyBryan, an app that pairs homeowners and tradespeople. Working with HeyBryan gave us an opportunity to reach a new audience and helped us establish credibility in the gig space. Our technology partner, Slice Labs, helped us merge the barrier between insurance and technology, allowing us to develop a product that made sense for HeyBryan app users.

Now that we’ve established this product for gig workers that use apps, we’re looking to expand to other gig-related professions by investigating their insurance needs. There is a need for a new product that addresses the revenue uncertainty these workers face and utilizes other potentially useful signals like “star ratings” and “re-hire rate” to dynamically underwrite and price insurance subscriptions in collaboration with partner platforms and apps.

As the world around us changes, the insurance industry needs to change with it. Overcoming these barriers to innovation and addressing evolving protection needs will be essential for insurance companies to maintain their relevance in our modern world.


Farooq Khan

Farooq Khan is the Director, Underwriting, at Duuo.

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